Appointment Clears the Way for Consumer Agency to Act

January 5, 2012

New York Times P. A16

On Jan. 4, President Barack Obama used his recess appointment powers to install
Richard Cordray as head of the new Consumer Financial Protection Bureau (CFPB),
effectively enabling the agency to monitor payday lenders, credit bureaus, and
utilize all of the powers given to it under the Dodd-Frank law. Without a
director at the helm, the agency was only able to monitor and enforce existing
regulations on consumer financial products and not able to write new regulations
for banking products. Cordray said, "Now, with a director, the CFPB can exercise
its full authorities -- with respect to both banks and nonbanks -- to help those
markets operate fairly, transparently, and competitively. [Most of the nonbank
financial companies] had no regular federal oversight in the run up to the
financial crisis. They led a race to the bottom that pushed aside responsible
businesses, including community banks and credit unions, and greatly harmed
consumers." The CFPB had begun its mission by placing regulators in the largest
banks to review mortgage lending and consumer banking fees, and the CFPB
director can now influence banking policy as a member of the Federal Deposit
Insurance Corp., which is still waiting for the U.S. Senate to confirm its
presidential nominees. While some applaud the recess appointment of Cordray,
banking groups say that it places the future of the CFPB in constitutional
jeopardy and could undermine its authority and credibility. Republicans have
held up Cordray's confirmation because they want to reform the agency to include
a five-member board rather than a single director, garner greater oversight and
accountability for the agency, and ensure the budget for the CFPB goes through
the congressional appropriations process.Web Link